Probate loans and advances are surprisingly controversial. Some consumer advocacy groups take issue with inheritance loan companies because they believe that the annual percentage rate (APR) that people pay on “borrowed” money are higher than they would pay for other types of loans. They may be right, but that is because of a misunderstanding about what probate advances actually are. Probate advances are not loans. Instead, the probate company is purchasing your share, or part of your share, of an estate. They charge you fees for that service. When the estate is probated, they get the amount of advance, plus any applicable fees.
Are inheritance advances legal?
There have been no legal changes for 2022 regarding the legality of probate loans or inheritance advances. If you are getting an actual probate loan, then laws regarding usury, which determine maximum percentage rates, may apply to the transaction. If you are getting an inheritance advance, then you are not paying any interest for the advance and usury laws will not apply.
How long to inheritance advances take?
For simple estates, you may be able to get an inheritance advance within 24 hours. For more complicated estates, the process may take longer. The length of time also depends on how much money you want to have advanced.
What do I need to get an inheritance advance?
To get an advance on an inheritance, you need to show two things. First, you need to show that you have an actual interest in the estate. Second, you have to show that the estate has assets to cover any bequests that you are supposed to receive. The documentation required to establish those factors may vary from estate to estate.
Will I have to repay the funding company if my share of the estate is smaller than anticipated?
It is important to read the terms and conditions of your agreement with your funding company. However, when you get an inheritance advance instead of a probate loan, the funding company is actually purchasing a portion of your interest in the estate. Therefore, if something happens, like the estate assets get devalued between you getting the funding and the estate being settled, the funding company is the one that takes the risk of the devaluation.
Do all heirs have to agree to inheritance advances?
No. You can get an inheritance advance even if other heirs do not want to get an inheritance advance. You can even get your advance if other people object to the advance. However, if there are questions about whether you will actually inherit, it may impact your ability to get funding.